China's Urban Water Supply Enterprises Performance Evaluation And Compensation Mechanism Research

As a basic industry, the water supply industry of our country plays a vital role to thedevelopment of the national economy and the stability of people’s lives. In the1990s, ourgovernment started the marked-oriented reform of the urban water industry, whichgenerally requires the water enterprises to be autonomous and self-financing marketplayers and to be able to develop steadily under the market mechanism. As it isunderpriced now, the water supply in China is like to increase in the process of the reform.With the growing price of running water, people have to reduce the consumption of it or ofother basic product. If there is no a corresponding financial subsidy mechanism, the risingof water price will worsen the living condition of urban poor consumers, increase theinequality of social distributions and affect the social stability. However, the present pricesubsidy mechanism for tap water in our country is not very scientific and reasonable,because it not only lacks of overall planning, but also confronts with many difficulties inpractical operations. What is more, the enterprises who have higher power of bargainingwith the government will often get more subsidies. As a result, in order to obtain subsidies,enterprises have strong rent-seeking incentives, which is not conducive to raising theperformance of business operations. At present, our water enterprise performanceevaluation indicators, such as assets operation level, solvency, service level, and enterprisedevelopment ability, are not satisfied.On these issues above, this paper will seek a reasonable method to solve the issue ofwater price rising and establish a subsidy mechanism which bases on the performanceevaluation of water enterprises, by drawing on the theory and practice in foreign country,and in accordance with the actual situation of China’s urban water supply sector reform anddevelopment,...